Washington, D.C. – Securing America’s Future Energy (SAFE) released today the first quarterly installment of its Oil Security Index for 2015, measuring the oil security of more than a dozen countries around the world.
Countries are measured on key indicators such as structural dependence on oil, economic exposure to the global oil market, and capacity to respond to oil supply disruptions.
The most recent update to the index follows the nosedive of the Russian ruble in the face of declining oil export revenues and sanctions imposed by the United States and Europe. Production growth struggled under this economic and political weight, and Q3 2014 marked the first decline in Russian production in years.
Falling prices are likely to hurt investment in the Russian oil sector, threatening future production in the world’s second-largest oil exporter and raising concerns over potential political repercussions in Moscow, as well as potential market tightness down the road.
Said SAFE CEO Robbie Diamond: “The plunge in global oil prices that began in late 2014 is going to present significant challenges for countries whose economies are heavily dependent on oil revenue and high oil prices. From Russia to Venezuela, Nigeria, and several major Middle East oil exporters, the current environment will force a tradeoff between public spending, upstream investment, and debt. We think long-term oil production in many of these countries will suffer, ultimately exposing the global economy to a return to high prices down the road.”
The United States remains fifth in Index rankings, unchanged from last quarter. The U.S. did, however, post its highest raw index score to date, a result of decreased spending on oil imports as a percentage of GDP, surging oil stock ratios, and the lowest fuel consumption per capita figure since index data collection began in 2000.
Added Diamond: “The United States is uniquely positioned among the major oil producers, as it is also a major oil consumer. Thus, the drop in prices brings relief in terms of reduced spending on oil imports and also reduced consumer spending on fuels. However, the U.S. economy remains critically vulnerable to the inevitable return to high oil prices, and will remain so as long as we fail to make further progress on oil dependence. Downward oil price swings can bring temporary economic benefits, but oil dependence is a long-term structural risk.”
Non-OPEC supply growth continues to be driven by the United States, which posted a year-over-year (y-o-y) increase of 1.3 million barrels per day (mbd) to 11.8 mbd for crude and liquids, 78 percent of the non-OPEC supply increase y-o-y.
Global supply outages improved slightly in Q3 2014, falling approximately 0.4 mbd to 3.0 mbd since Q2, though persistent outages in geopolitical hotspots Iraq, Iran, Nigeria and Syria continue to spark concerns over oil market volatility and its effects on the global economy.
Additional highlights from the latest Oil Security Index include:
To learn more about the Oil Security Index, a project of SAFE and Roubini Global Economics (RGE), visit www.OilSecurityIndex.org. The online tool is updated quarterly and contains an interactive map featuring multiple indicators that provide an overall understanding of a nation’s complete oil security landscape.
About Securing America’s Future Energy (SAFE)
Securing America’s Future Energy (SAFE) is a nonpartisan organization that aims to reduce America’s dependence on oil and improve U.S. energy security to bolster national security and strengthen the economy. SAFE advocates for expanded domestic production of U.S. oil and gas resources, continued improvements in fuel efficiency, and in the long-term, breaking oil’s stranglehold on the transportation sector through alternatives like natural gas for heavy-duty trucks and plug-in electric vehicles. In 2006, SAFE joined with General P.X. Kelley (Ret.), 28th Commandant of the U.S. Marine Corps, and Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation, to form the Energy Security Leadership Council (ESLC), a group of business and former military leaders committed to reducing U.S. oil dependence.
About Roubini Global Economics (RGE)
Roubini Global Economics (RGE) is an independent, global macro-economic strategy research and country risk firm founded in 2004 by renowned economist Nouriel Roubini. RGE research interprets global economic signals into practical macro-strategy insight for a wide range of financial and policy professionals. RGE’s Country Risk product offers a unique approach to measuring country risk, delivering analysis that is consistent across time and ignores market noise. Our research approach broadens our clients’ understanding of global economies and markets by illustrating vulnerabilities and risks; giving them constructive frameworks for clarity and helping them to make more informed decisions. RGE is headquartered in New York and also has an office in London.
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